Distribution of inventory differences to orders:

The costs of producing a material are calculated from the backflushes and the internal activity allocations at the time of goods receipt for these materials.

At the end of the accounting period, the warehouse stock of the material components is checked. The costs of any material components found to be missing can no longer be assigned directly to a product cost collector.

Instead, the costs for the missing material components are assigned to a cost object node in the cost object hierarchy, and distributed to the individual product cost collectors processed in the period in question in proportion to the target material usage costs for the missing material components. The cost object node could be for a product group or production line, for example.

These material costs are passed to stock when the orders are settled. If the material has the price control indicator V, the moving average price is changed accordingly.

An internal activity allocation posted USD 30 to the cost object node for a production line because of maintenance tasks. These costs were updated under cost element 600000.

Target costs were calculated for two products in the cost object hierarchy under cost element 600000. The target costs of product 1 are USD 400. The target costs of product 2 are USD 200. The ratio of product 1 to product 2 is 2:1. Product 1 contains USD 20 and product 2 contains USD 10.

Ten production orders were created for each product during the period. USD 2 is charged to all orders for product 1. USD 1 is charged to all orders for product 2.